With risks relating to climate change on everyone’s mind, the challenge for companies is to combine growth and productivity with respect for environmental standards and a reduction of their environmental impact. Fortunately for businesses, they can access tools to support them and help measure their efforts.
What does ‘environmental impact’ mean?
The phrase ‘environmental impact’ denotes the effects that a company’s activities have on the environment. Sometimes called ‘environmental consequence’, ‘environmental impact’ refers to all consequences, good or bad brought about by a project or product, from design to the end of its life cycle. The notion of environmental impact therefore encompasses both an activity’s positive effects, like the use of renewable energy, and its negative effects, like noise pollution and waste. To assess a product’s ecological quality, environmental impact indicators are classified according to their intensity, probability, scope, frequency and duration. These indicators are mainly used to assess impacts on noise and air pollution, water quality, resources and human health.
Efforts by industry to protect the environment represent a considerable strategic challenge. These efforts go beyond regulatory constraints in environmental compliance. Industry must now incorporate sustainable development concerns at the heart of its strategy, as it does with cost control. For industrial companies, consideration of the environmental impact of a product or project reflects on their corporate image. Being able to measure and control its impact has therefore become an integral part of corporate good management and PR.
Reducing environmental impact: what tools can support companies?
The linear economic model of extraction, production, consumption and destruction is now obsolete. Global warming has brought with it new regulations and changes in stakeholder expectations that have compelled industries to rethink their business model. More and more industrial firms are reviewing their processes in the light of their environmental impacts. They no longer have to choose between financial performance and responsible practice, but must instead strike a balance between profitability and respect for the environment.
Given these new challenges, several tools have been introduced to support companies as they implement Environmental Management Systems (EMS). Although this approach is often restrictive, it helps companies reduce their production costs and make big energy savings. Beyond the financial benefits that it brings, incorporating an EMS into a business boosts brand image and drives growth and innovation. The ISO 14001 standard helps firms reduce their environmental impact. It sets businesses on an ethical path to progressively improve their management in order to limit their impacts. ISO 14001 compliance requires commitment to environmental legislation and regulations in force. Furthermore, and above all, it demands a process of continuous improvement within a company. Today, many companies use their ISO 14001 certification for external recognition: it confirms their environmental approach in the eyes of stakeholders.
Ecolabels are another support tool that companies can use as environmental accreditation. These guarantee that stringent requirements are being met in limiting the effects of products and services on health and the environment. Applicable criteria vary depending on the product, but all require high-quality products with a limited impact on the environment. Since the 1990s in France, the EU Ecolabel and the NF Environnement mark have been the only official certifications. They are issued by AFNOR (the French standardisation association) for products or services that meet the criteria of the ISO 14024 standard. Each ecolabel certifies that the product’s life cycle is environmentally-friendly, from manufacturing through to the end of its life. Independent laboratories are commissioned to carry out tests.
Green investment is another tool available to businesses to help reduce their environmental impact. This practice, usually part of Socially Responsible Investment (SRI or RI), includes all financial operations conducted out to foster energy transition and reduce a company’s carbon footprint. These ecological investments cover a wide range of sectors, from urban planning to food and energy. For example, firms can invest in carbon sequestration by contributing to reforestation programmes.
Which indicators measure a project’s environmental impact?
After choosing a benchmark standard, a company should select the most suitable indicators for areas in which it would like to improve. The firm can demonstrate its ability to generate added value in regard to the environment by means of ongoing assessments. Today, many businesses have already recognised the need for a tool that could measure their environmental performance using the objective data generated through EMS integration.
Environmental indicators and audits were initially introduced under pressure from institutions and out of a desire for legitimacy. But now they are used as tools for corporate decision-making and performance management. The two main purposes of environmental performance indicators are still essentially to help decision-making and communicate data.
The benchmark that has been used worldwide since 1999 is the ISO 14031 Environmental Management standard.
To help companies accurately evaluate their environmental performance, these standards refer to 3 categories of performance indicators:
- Management Performance Indicators (MPI)
These provide data on managerial efforts to steer environmental performance.
- Operational Performance Indicators (OPI)
These provide data on environmental performance regarding a company’s operations (consumption and waste).
- Environmental Condition Indicators (ECI)
These provide data on the local, regional, national or global conditions of the environment.
Environmental Performance Indices are specific to each company and prioritised according to their sector-specific challenges and environment. The first step is to define what is to be assessed (the company, its subcontractors, a production line, a product, etc.). This is the most difficult phase in introducing an environmental performance evaluation system so it is vital to understand these indicators and select the most relevant ones to that company. Once they have been chosen, they should be regularly audited so that any adjustments can be made in order to continuously improve performance.
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